Chapter XXI - Penalties
Section 466
Section 466: penalty for failure to comply with the provisions of section 254
Section 466 is a short provision that penalises non-compliance with section 254 of the Act. The maximum penalty was recently revised upward under the Finance Act, 2026.
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Need advice on Section 466?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
If a person fails to comply with the provisions of section 254, the Joint Commissioner, Deputy Director or Assistant Director or the Assessing Officer, may impose a penalty which may extend up to ₹25,000 on him.
Introduction
Section 466 permits a penalty up to ₹25,000 for failure to comply with section 254. The Finance Act, 2026 raised the ceiling from ₹1,000, so the relevant date and current text matter.
Key takeaways
Covered failure
The penalty provision applies to failure to comply with section 254.
Current maximum
The maximum is ₹25,000 after the Finance Act, 2026 substitution, effective 1 April 2026.
What Section 466 says
"If a person fails to comply with the provisions of section 254, the Joint Commissioner, Deputy Director or Assistant Director or the Assessing Officer, may impose a penalty which may extend up to ₹25,000 on him."
The text notes that the ₹25,000 figure was substituted for an earlier ₹1,000 by the Finance Act, 2026, with effect from 1 April 2026.
Who can impose the penalty
The penalty may be imposed by the Joint Commissioner, the Deputy Director, the Assistant Director, or the Assessing Officer.
Applying Section 466 in practice
Boundary. The penalty can extend to ₹25,000 for failure to comply with section 254. Section 466 does not by itself explain which conduct section 254 requires; the content and addressee of that primary duty must be shown first.
Step-by-step flow for applying Section 466
- 1
Did an income-tax authority act under section 254?
Section 254 lets the authority enter a building or business place to collect information, and require persons attending to the business there to furnish prescribed information.
- No: Section 466 does not apply.
- Yes: Go to the next step.
- 2
Did the person fail to comply with section 254?
For example, not furnishing the prescribed information when required.
- No: No penalty.
- Yes: Go to the next step.
- 3
Who may impose the penalty?
The Joint Commissioner, Deputy Director, Assistant Director or the Assessing Officer.
- 4
Decide the amount
The penalty may extend up to ₹25,000. It is a maximum, not a fixed sum. Check Section 470 (reasonable cause), which lists Section 466, and the hearing required by Section 471(1).
Practical checklist
Do
- Identify the specific section 254 requirement and the act said to breach it.
- Check which named authority is imposing the penalty and that the amount does not exceed the amended ₹25,000 ceiling.
- identify the applicable section 254 requirement, the notice or direction if one is involved, date, attempted compliance and records of any obstacle.
Avoid
- Do not describe ₹25,000 as a mandatory fixed penalty; it is the statutory maximum.
Illustrative example
Worked example: an employee declines to give information
Hypothetical facts (illustration only, not a real taxpayer): An Assessing Officer enters a shop during business hours under section 254 and asks the manager to furnish the prescribed information. The manager refuses and says the owner is away. The facts are assumed.
Section 254 action
The entry was during business hours, and the manager was attending to the business, so the manager could be required to furnish the information.
Failure
The refusal is a failure to comply with section 254.
Amount
The Assessing Officer may impose a penalty of up to ₹25,000. The exact amount is the officer's decision within that limit.
Reasonable cause
If the manager proves a reasonable cause, for example that the information was not available to him at that time, Section 470 bars the penalty.
Outcome
- Exposure is a penalty of up to ₹25,000.
- Section 466 states no minimum.
Frequently asked questions
What is the maximum penalty under Section 466?
Up to ₹25,000, for failure to comply with the provisions of section 254.
Has the penalty amount changed recently?
Yes - the Finance Act, 2026, substituted ₹25,000 in place of the earlier ₹1,000 figure, with effect from 1 April 2026.
Who can impose the Section 466 penalty?
The Joint Commissioner, the Deputy Director, the Assistant Director, or the Assessing Officer.
Is ₹25,000 a fixed penalty under Section 466?
No. The wording permits a penalty that may extend up to ₹25,000.
Need help applying this provision to your situation?
Talk to our tax team about a compliance noticeLast updated 10 October 2026